Malawi Economy

By: EconomyWatch Content   Date: 9 April 2010

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Malawi is a landlocked country in the south-eastern region of Africa. It is bordered by Tanzania, Mozambique and Zambia. In terms of total land area available, Malawi ranks 99th in the world. The Great Rift Valley passes from north to south through Malawi. The Lake Malawi runs across the eastern region of the country. Malawi’s economy is considered to be one of the least developed in the world. The densely populated country suffers from widespread poverty, underemployment and increasing endemic AIDS. According to the 2009 estimates, the country has a population exceeding 15 million.

Malawi Economy: Introduction

Malawi economy highly depends on agricultural productivity. Approximately 90% of the population is engaged in farming and livestock activities. Agricultural exports contribute almost 85% of the total GDP. Unsustainable growth of the industrial sector is reflective of the conservative investment policies and trade barriers. Due to a hostile investment environment, Malawi falls short of foreign investment, which is a prime requirement for infrastructure growth.

 

Malawi receives considerable financial aid from the International Monetary Fund (IMF) and World Bank. However, fund embezzlement is a serious issue at the administrative level. In 2000, the World Bank stopped clearing funds due to widespread corruption in the government. Later, the funds were released following strategic fiscal reforms to contain embezzlement.

 

Owing to pro-active fiscal policies and large scale foreign aid, Malawi has been able to achieve a high GDP growth rate since 2007. According to the 2009 figures, the country’s GDP stands at US$12.8 billion, with an 8.5% inflation rate.

  

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